The Committee of Creditors recommended the liquidation of the Gopi Ltd. i.e., corporate Debtor and the National Company Law Tribunal (NCLT) i.e., adjudicating authority did not concur with the decision of the Committee o

The moot question to be decided in proposed appeal to be filed against the Impugned Order passed by the National Company Law Tribunal, as to whether the Adjudicating Authority can discard the recommendation of the Committee of Creditors (CoC) and rather give its own directives overriding the commercial wisdom of the Committee of Creditors. The Supreme Court passed its order in the case of K. Sashidhar v. Indian Overseas Bank & Ors. (Civil Appeal No. 10673 of 2018) wherein the SC, inter alia, has held that The National Company Law Tribunal ("NCLT") and the National Company Law Appellate Tribunal ("NCLAT") have no jurisdiction and authority to analyse or evaluate the commercial decisions taken by the committee of creditors ("Committee of Creditors"). Non recording of reasons for approving or rejecting the resolution plan by the concerned financial creditors during the voting in the meeting of Committee of Creditors, would not render the final collective decision of Committee of Creditors nullity per se. Concededly, if the objection to the resolution plan is on account of infraction of ground(s) specified in section 30(2) and 61(3), that must be specifically and expressly raised at the relevant time. For the approval of resolution plan by the Committee of Creditors can be challenged on those grounds. However, if the opposition to the proposed resolution plan is purely a commercial or business decision, the same, being non-justiciable is not open to challenge before the Adjudicating Authority (NCLT) or for that matter the Appellate Authority (NCLAT). If so, non-recording of any reason for taking such commercial decision will be of no avail. The Hon'ble National Company Law Appellate Tribunal has held that the Committee of Creditors has the discretion to approve any resolution plan and its decision to approve the same cannot be interfered with by the Adjudicating Authority or the Appellate Authority, except for in terms of Section 31 (1) to examine compliance of Section 30(2) read with relevant regulations. (Ref: Kannan Tiruvengandram Vs. M.K. Shah Exports Ltd. & Ors. in and Darshak Enterprise Pvt. Ltd. and Ors. v. Chhaparia Industries Pvt. Ltd. and Ors. E. ) Decision of Appellate Tribunal's earlier order in case of Amit Bharana and Ors vs. Gian Chand Narang Adjudicating Authority must consider/ rely on commercial wisdom of CoC. The Resolution for Liquidation of the corporate Debtor decision of has been passed by the committee of Creditors was with a majority of by more than the required threshold of 66%. Thus, the decision of liquidation of the corporate Debtor is a valid and in order. The legislature has not endowed the Adjudicating Authority with the jurisdiction or authority to evaluate the commercial decision of the CoC. In the matter of vallal RCK Vs. M/s Siva industries and Holdings limited and Ors. the Hon'ble Supreme court in its judgement dated 3rd June, 2022, observed that when 90% and more of the creditors, in their wisdom after due deliberations, find that it will be in the interest of all the stake-holders to permit settlement and withdraw CIRP, the adjudicating authority or the appellate authority cannot sit in an appeal over the commercial wisdom of CoC. The interference would be warranted only when the adjudicating authority or the appellate authority find the decision of the CoC to be wholly capricious, arbitrary, and irrational and de hors the provisions of the statue or the Rules.